By Professor John Mullins, left, author of Break the Rules! The Six Counter–Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World
When Alex Ikonn and Mimi Naghizada started their first venture, Luxy Hair, they didn’t go looking for investment capital. After all, despite every founder’s innate optimism, the reality is that most new ventures fail, some sooner, some later. Why seek investors, they figured, when future outcomes are uncertain? Maybe it would be better to “borrow” the assets they needed to prove the concept.
Happily, I’ve discovered that many successful entrepreneurs – Alex Ikonn among them – exhibit one or more of six break-the-rules mindsets that allow them to take advantage of opportunities that present themselves along the entrepreneurial path. Surprisingly, however, these mindsets fly in the face of what’s taught in business schools about strategy, core competencies, target marketing, financing and more. They run counter to the conventional wisdom that’s typically found in large and well-established companies.
In 2010, Mimi and Alex were planning their wedding. Mimi wanted to wear hair extensions to augment her already lustrous locks. But what she found in the nearby shopping malls just wasn’t going to cut it. Neither the quality nor quantity was right, in Mimi’s view. Alex wondered whether hair extensions sold online might be the opportunity he’d been looking for.
To make a long story much shorter, the couple found a supplier in China and “borrowed” pretty much everything else they needed: a free WordPress site; a PayPal button; a logistics provider to receive, hold, and ship orders as they arrived; plus airtime on YouTube for a series of videos in which Mimi offered hair styling advice to a growing cadre of followers. Next, mustering up their courage, the couple applied simultaneously for multiple credit cards offering zero interest for six months on cash advances. Together with another $6,000 that Ikonn’s Mum was willing to lend, the couple assembled $20,000, enough to finance the first shipment.
One question remained: Would sales take off? They did! Week 1, $1,000; month 1, $20,000; year 1, $1 million. Within 6 months, they repaid the credit card advances and Alex’s Mum, too. Before long they found themselves running a multi-million-dollar direct to consumer (DTC) business selling nothing but hair extensions. But the best news was this. Having “borrowed” almost all the resources the business needed, all this had been accomplished with just 3.5 employees!
If you are an aspiring entrepreneur, how might you learn and adopt a “Beg, borrow, but don’t steal” mindset and the other five mindsets, too? How might you master them and make them your own? First (Tip 1), you’ll need to know what they are:
- Problem-first, not product-first, logic: Entrepreneurs know that if they solve genuine customer problems, their businesses will thrive!
- Think narrow, not broad: Once success is established in a tiny market, entrepreneurs know learning happens to enable their businesses to grow from there.
- “Yes, we can!”: When asked by a prospective customer whether they can do something promising that’s entirely new and unfamiliar and falls outside their current competencies, entrepreneurs say “Yes, we can!”. Then they figure out how!
- Ask for the cash, ride the float: By getting customers to pay in advance, and by paying their suppliers afterwards, entrepreneurs put that spare cash into growing their businesses.
- Instead of asking permission, beg forgiveness later: When the legal or regulatory landscape is ambiguous or uncertain, entrepreneurs simply plough ahead.
- Beg, borrow, but don’t steal: “Borrowing” the resources an entrepreneur needs to start something new beats investing in those resources, hands-down.
If you want to get your new venture underway using “borrowed” assets, here are four more tips to help you get started:
- Tip 2: Find someone who has an asset you need, but is not fully utilising it. When I started Pasta Via many years ago, we “borrowed” an under-utilised commercial kitchen where we made our fresh pasta and sauces. We didn’t invest in our own kitchen until we’d proven our concept.
- Tip 3: You can borrow “soft” assets, too. When Tristram and Rebecca Mayhew started their outdoor adventure business, GoApe!, they found a UK charity, ROSPA, that was eager to support their quest for helping people “live life adventurously” at least for a few hours. Credibility won!
- Tip 4: You can “borrow” expertise you don’t have, from consultants, informal advisors, and more.
- Tip 5: But don’t steal! Cambridge Analytica illegally “borrowed” – no, stole – the Facebook data of some 50 million Americans which enabled it to run more than 4,000 campaigns for Donald Trump in the 2016 US presidential election. Insolvency was the eventual result.
So, if an entrepreneurial path is one to which you aspire – as a leader or as an engaged participant therein; whether you’re already on such a path or soon to embark – adopting and mastering the six break-the-rules mindsets will give you a fighting chance to beat the long odds.
John Mullins is Associate Professor of Management Practice at London Business School and author of new book Break the Rules! The 6 Counter–Conventional Mindsets of Entrepreneurs That Can Help Anyone Change the World (published by Wiley, £21.99).